1.

CC Company borrowed P4, 000,000 on a 10% note payable to finance a new warehouse
which the entity is constructing for own use. The only other debt of the entity is a P6,
000,000, 12% mortgage payable on an office building. At the end of the current year,
average accumulated expenditures on the new warehouse totaled P4, 750,000. What
amount should be capitalized?

Average expenditures 4,750,000.00

specific borriwings 4,000,000.00 10% 400,000.00

general borrowings 750,000.00 12% 90,000.00

490,000.00